A-LEVEL BUSINESS

REVISION BLAST

FINANCE BASICS
 A downside of issuing shares to new investors is

* A Loss of some control

* B Worsening cash flow position

* C Dividends don’t need to be paid

* D The amount is treated as debt

Multi choice questions

 A business has a current ratio of 1.5:1. The business has current liabilities of
£150,000. What are the current assets of the business?

* A £50,000

* B £100,000

* C £225,000

* D £300,000

Multi choice questions

 Which of these is usually a variable cost?

* A Loan repayment

* B Rent

* C Insurance

* D Packaging

Multi choice questions

 A favourable cost variance occurs when budgeted fixed costs
Statement 1
are lower than actual fixed costs
A favourable profit variance occurs when actual profit is lower
Statement 2
than budgeted profit
Read statements 1 and 2 and select the correct option from the following options:

* A Statement 1 is true. Statement 2 is true

* B Statement 1 is true. Statement 2 is false

* C Statement 1 is false. Statement 2 is true

* D Statement 1 is false. Statement 2 is false

Two statement challenge

 The formula to calculate break-even is fixed costs divided by
Statement 1
contribution per unit
An increase in contribution per unit will lead to an increase in
Statement 2 the break-even point (assuming all other variables remain
unchanged)
Read statements 1 and 2 and select the correct option from the following options:

* A Statement 1 is true. Statement 2 is true

* B Statement 1 is true. Statement 2 is false

* C Statement 1 is false. Statement 2 is true

* D Statement 1 is false. Statement 2 is false

Two statement challenge

 BUBBLE QUIZ

The number of answers that are correct can range from zero to all four!

How many of the answers shown are correct?

 Which of these are liquidity ratios?

Profit for the

Profit for the Year/Net Operating Profit
Year/Net Profit
Profit Margin Current Ratio
Current Ratio Gross
GrossProfit Margin
Profit Margin Operating Profit Margin
Margin
Margin

A B C D
NONE
The number of answers ARE
that are CORRECT!
correct can range from zero to all four!
 Which of the following would lead to an increase in contribution per unit?

A reduction in
An increase in the A reduction in fixed An increase in fixed
variable costs per
selling price per unit costs costs
unit

A B C D
NONE
The number of answers ARE
that are CORRECT!
correct can range from zero to all four!
 60 SECOND CHALLENGE
A Current Ratio Non-Current Liabilities + Total
1
Equity

Actual Amount – Budgeted 2

B Margin of Safety Amount

Actual Level of Output - Break-

C Variance Even Level of Output 3

D Capital Employed Current Assets / Current Liabilities 4

E Sales Revenue – Cost of Sales Gross Profit 5

60 Second Challenge (5 answers)

 60 SECOND CHALLENGE
A Current Ratio 4 Current Assets / Current Liabilities

Actual Level of Output - Break-Even Level of

B Margin of Safety 3 Output

C Variance 2 Actual Amount – Budgeted Amount

D Capital Employed 1 Non-Current Liabilities + Total Equity

E Sales Revenue – Cost of Sales 5 Gross Profit

60 Second Challenge (5 answers)

 60 SECOND CHALLENGE
Below
Below is
is the
the budgeted
budgeted and
and actual
actual income
income and
and expenditure
expenditure for for aa business
business last
last
year.
year. Calculate
Calculate the
the profit
profit variance
variance and
and state
state whether
whether itit is
is adverse
adverse oror favourable
favourable
Budget Actual
Income £140,000 £150,000
Expenditure £60,000 £50,000

Budgeted
Budgeted Profit
Profit == £140,000
£140,000 -- £60,000
£60,000 == £80,000
£80,000

Actual
Actual Profit
Profit == £150,000
£150,000 -- £50,000
£50,000 == £100,000
£100,000

Profit
Profit variance
variance == £100,000
£100,000 -- £80,000
£80,000 == £20,000
£20,000 favourable
favourable

60 Second Challenge
 2

TRUE OR FALSE

A fixed cost never changes

TRUE FALSE
True or False
 1

TRUE OR FALSE

Venture capital sometimes results in a loss of

control

TRUE FALSE
True or False
 1

TRUE OR FALSE

The formula to calculate return on capital

employed (ROCE) is operating profit / capital
employed

TRUE FALSE
True or False
 60 SECOND CHALLENGE

Last
Last year,
year, aa business
business had
had yearly
yearly fixed
fixed costs
costs of
of £180,000.
£180,000. The
The selling
selling price
price per
per
unit
unit was
was £5,
£5, and
and the
the variable
variable cost
cost per
per unit
unit was
was 2/5
2/5 the
the selling
selling price.
price.

Calculate
Calculate the
the monthly
monthly break-even
break-even point
point last
last year
year

Variable
Variable cost
cost per
per unit
unit == £5
£5 xx 0.40
0.40 == £2
£2

Contribution
Contribution per
per unit
unit == £5
£5 -- £2
£2 == £3
£3

Yearly
Yearly break-even
break-even point
point == £180,000
£180,000 // £3
£3 == 60,000
60,000 units
units

Monthly
Monthly break-even
break-even point
point == 60,000
60,000 // 12
12 == 5,000
5,000 units
units

60 Second Challenge
 RED HERRING

Which of the four items is the odd one out and why?
 RED HERRING
A Inventory

B Receivables

C Cash

D Payables

Which of the four items is the

Current odd one out and why?
Assets
 RED HERRING
A Venture Capital

B Loan

C Overdraft

D Retained Profit

Which of the four items

External is theofodd
Methods one out and why?
Finance
 60 SECOND CHALLENGE
Output (Units) Total Costs (£)
The table to the right shows
0 50
some costs relating to a
1 70
product
2 90
3 110
Calculate the total variable
4 130
costs of producing 4 products

Variable
Variable cost
cost per
per unit
unit == £70
£70 -- £50
£50 == £20
£20

Total
Total variable
variable costs
costs of
of producing
producing 44 units
units == £20
£20 xx 44 == £80
£80

Or
Or

£130
£130 -- £50
£50 == £80
£80

60 Second Challenge
A-LEVEL BUSINESS

REVISION BLAST

FINANCE BASICS